3 Reasons Why Long-Term Endorsement Deals Pose a Major Risk

3 Reasons Why Long-Term Endorsement Deals Pose a Major Risk

2018-09-05

In hopes of ensuring a fortified and stable relationship with a big-name celebrity (and in turn grab consumer attention and differentiate themselves), brands have long resorted to inking long-term endorsement deals with celebrity partners. But in today’s ever-shifting, social media-fueled landscape, marketers must begin to rethink this approach.

Here are the three main reasons why long-term endorsement deals have become a risky move for brands today.

1. Celebrity Momentum Can Be Wildly Unpredictable

Things are changing in celebrities’ lives all the time — whether they get signed to a new team, star in a new film, get engaged or have a child. And these factors all have an impact on the types of consumers the celebrity appeals to and consumer sentiment for that celebrity.

Look at the example of Uniqlo, which recently signed a 10-year endorsement deal (reported to be worth more than $300 million) with tennis star Roger Federer. While Federer is undoubtedly a tennis legend and his name and image will live on, he continues to openly discuss his now imminent retirement. The fact that Uniqlo signed such a long-term, costly endorsement deal with Federer as he is on the brink of retirement certainly carries risk. Much of his fame is tied to his strong tennis results, and retirement could very likely lead to a drop-off in relevance and momentum among consumers.

At Spotted, we’ve actually found that the average celebrity sees a 30% change (either positive or negative) in momentum every three months. What you need to do is stay vigilant with your celebrity investments and ensure that they remain relevant and continue to resonate with your target markets. Otherwise, the endorsement will surely lose effectiveness over time, leading you to spend money in the wrong areas or waste budget altogether.

2. Celebrity Endorsers Pose More Risks Than You Know

Celebrities are only human, meaning that mistakes, scandals, and mishaps can be commonplace. So there will always be risks associated in attaching your brand to a celebrity, particularly if you get locked into a long-term deal with no easy way out. And this has become truer than ever in the age of social media.

With social media at their fingertips, consumers feel emboldened to speak out publicly when they disapprove of a celebrity’s actions. This leaves every move a celebrity makes to be quickly scrutinized, with even the smallest missteps capable of damaging brand safety.

They’re caught feuding with a fellow celebrity like Kim Kardashian West and Taylor Swift? They sent out a suggestive or inappropriate tweet years ago like Guardians of the Galaxy director James Gunn? They outwardly support a political party or polarizing social cause like former San Francisco 49er Colin Kaepernick? All of these things — which don’t even include larger scandals, controversies, and criminal actions such as a prior arrest, a drug- and alcohol-related incident, accusations of sexual misconduct or assault — can immediately blow up, turn off target consumer audiences, and pose a major risk to an organization.

There’s never a guarantee that a celebrity won’t slip up or offend consumers in some way, shape, or form.

3. The Endorsement Can Launch with a Resounding Thud

Even more than the behavioral risks tied to celebrities outlined above, brands are likely to fall victim to consumer-related risks. Specifically, what if your celebrity endorsement does not resonate with target consumer audiences from the start?

Imagine spending millions to lock a celebrity into a multi-year deal — not to mention additional production, advertising, and media costs — only to release your first campaign and find that consumers either completely tune it out, shrug at it, or find it at odds with themselves as a consumer. Then what happens? You’re stuck working with that celebrity partner for a few years, only further wasting budget.

By partnering with a celebrity that target consumers don’t find appealing or that does not align with your brand values, personality, and messaging, two things will happen. Consumers will think, “Oh, you don’t understand me as a consumer,” then they will likely also feel confused by the jarring disconnect between brand and celebrity.

Before signing a celebrity for a multi-year endorsement deal, first ensure that you’ve tested the waters and dug deep enough to truly understand how the celebrity will impact your brand and your target consumers.

Don’t Let Your Next Endorsement Deal Fall Flat

Celebrity scandals and mishaps are an inevitability. Celebrity relevance and momentum can be rapidly lost, killing endorsement effectiveness. Sometimes, a celebrity partnership doesn’t resonate from the start.

Mitigate and avoid the multitude of risks associated with celebrity endorsement with Spotted.

Spotted houses the richest data and research set on celebrity talent globally, weighing more than 100 variables to ensure that you dig past vanity metrics, maintain brand safety, and invest in celebrities who have strong appeal with your target consumers.